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Bonds fall after hot U.S. inflation and talk of a larger Fed hike
Reuters reported global bonds sold off after October U.S. core inflation ran at 0.3% month over month, with some Fed officials discussing a possible half-point December hike.
- New headline Was: “Bonds reel as hot inflation fuels jumbo Fed hike fears”
- Our desk filed its story
Based on reporting by Reuters
Global bonds fell and the dollar held firm after U.S. core inflation for October ran at 0.3% month over month, above a 0.2% forecast, Reuters reported from Sydney on Wednesday1.
Reuters said the print, together with comments from Federal Reserve officials, raised talk of a possible half-point rate increase at the December meeting, while stocks stayed relatively steady1.
Before the data, Fed Governor Christopher Waller said a 0.3% core reading would lead him to consider a 50-basis-point hike in December, Reuters reported1.
Dallas Fed President Lorie Logan said two more increases were needed, possibly on a rapid timetable, Chicago Fed President Austan Goolsbee pointed to an inflation problem, and Philadelphia Fed President Anna Paulson favored gradual hikes, according to Reuters1.
Fed funds futures implied a quarter-point December move as nearly certain, with about a 10% chance of a 50-basis-point rise, and three quarter-point moves fully priced by mid-2027, Reuters said1.
Two-year Treasury yields rose 18 basis points overnight, Japan's 10-year yield was up 7 basis points to 2.755%, and Australia's 10-year yield was up 6 basis points to 5.05%, Reuters reported1.
Goldman Sachs chief U.S. economist David Mericle still expected a 25-basis-point December hike rather than 50, and added a third 25-basis-point increase in March 2027 that would take the funds rate to a 4.25%-4.50% peak, Reuters said1.